The Controversial David Magerman

Wealthy Main Liner David Magerman has given millions to Philadelphia’s Jewish community. The Jewish community is thankful. Sort of.

Main Line investor David Magerman at Citron and Rose.

Jennifer Love Hewitt is standing in a coffee shop on 43rd and Baltimore, deep in conversation with a plus-sized gentleman. “You know what would be weird?” the man asks, tentatively. “If this world were, like, a virtual world. And everyone in it were a fake, computerized character that someone else was making up and controlling.”

Improbably, this resonates with the actress, who floats a cosmic scenario of her own: “What if the entire expanse of the sky was just a big sheet of black construction paper? You know, like, in the shape of a, like, a dunce cap or something? You know, at the tip of the cone was the moon. And, like, this huge giant could look down on us?”

Hours later, Love Hewitt is murdered on the streets of West Philadelphia, only to be resuscitated the very next day, thanks to the fat man’s newfound faith.

This turn of events, it should be noted, took place not in real life but in an allegorical indie flick called Café that generated some mild applause at the 2010 Philadelphia Film Festival. The plot details of Café—the murder, the resuscitation—aren’t all that important. What matters is that its executive producer is a fantastically rich Main Line philanthropist named David Magerman. And to understand Magerman, whose mission involves reshaping Philadelphia’s Jewish community, you’ve got to understand his relationship to Café.

A decade ago, Magerman went through a spiritual awakening much like the fat man’s: He had a midlife crisis, quit his Long Island hedge fund, moved to Gladwyne, adopted Modern Orthodox Judaism, and decided to devote his life to Jewish causes. Now he owns Citron and Rose, the Philadelphia area’s only gourmet glatt kosher restaurant, which he started a year ago with über-chef Michael Solomonov. Meanwhile, through his Kohelet Foundation, he’s given millions to every Jewish day school within a 50-mile radius. Oh, and he wants to explode a tiny pocket of the Main Line into the Orthodox epicenter of the East Coast.

But despite the personal resonance of Café, which was written and directed by another Main Line Orthodox Jew, and despite the fact that he bankrolled the whole thing, Magerman now doesn’t like the movie. “It was on IFC last week,” he told me one weekend this summer. “I haven’t chosen to watch it.”

See, 44-year-old David Magerman doesn’t generally approve of how other people spend his money. So he’s stopped producing movies, let go of one of the hottest chefs in America, and basically given the finger to the most powerful entity in Jewish Philadelphia—at least a few times. Beneath the overt tension between Magerman and his adopted community, however, lies an internal tension. Spiritual, philanthropic millionaire David, it turns out, might not be ready to say goodbye to cocky, hedge-fund millionaire David.

“I’m a systems guy,” Magerman tells me by way of introduction, half a minute after we first meet. Juggling a Koosh ball, the sandy-haired, baby-faced philanthropist is slouching on a chair in his second-floor office at Kohelet Yeshiva High School in Merion. The school, which he uprooted from Northeast Philly three years ago, sits at the geographic heart of Magerman’s project, just off Montgomery Avenue’s ultra-Jewish commercial corridor. “I see it as a great system for life,” he continues, meaning Judaism. He’s relied on the same phrase in previous published interviews, but it’s more than a rehearsed talking point: Magerman’s been methodically test-driving systems his whole life.

The son of a cabdriver and a secretary, he was raised Conservative Jewish in Miami. By the time he enrolled at Penn in 1986, he had stopped practicing. After his father died his freshman year, the self-proclaimed “lab rat” sat shiva for a day with his mother before rushing back to campus without finishing the week-long mourning. The closest he came to faith was a grad-school dalliance with Ayn Rand, which began at Stanford, where he earned his Ph.D. in computer science. And like any good, nerdy John Galt ascending the ranks of the meritocracy, he realized after graduation that the spoils of academia just weren’t sufficient for an intellectual hero.

In 1995, he joined what many consider the best-performing hedge fund ever: Long Island-based Renaissance Technologies. “It was very Ayn Randian,” Magerman says. “In some sense, people inside the company looked down on people who were not making a lot of money and not super-intelligent.”

It wasn’t simply the gobs of cash that appealed to him; it was how the money was made. Renaissance’s flagship investment vehicle is called the Medallion Fund, and it’s legendary for two reasons. First, it never fails. Since the mid-’90s, it’s had one negative quarter, and has averaged an unheard-of 40 percent return. Second, it possesses a secret mathematical formula that computers use to troll at high speed for hidden patterns.

If Rand’s objectivism—along with an incongruous dabble into the Gaia Hy­pothesis—was Magerman’s first “system,” Renaissance provided another. But a decade later, he’d grown disillusioned with both. Put off by the greed and conspicuous consumption of his colleagues (helicopters to Manhattan for dinner, for example), Magerman decided the “American mind-set of achievement orientation” wasn’t a “sustainable model.” Equally, he came to realize, objectivism was a “system that probably works, but it leaves people dead or starving.” (For what it’s worth, it was reported in July that the IRS has accused the Medallion Fund of cheating the government out of millions in taxes.)

Around the time Magerman began plotting his departure from Renaissance, in the mid-2000s, he took a trip to Israel and was so inspired that upon returning, he enrolled in a Torah-by-phone program. Presto, he had his new system. In 2006, seeking a faith-oriented community away from New York, which he’d been trying to escape since 9/11, he settled in Gladwyne with his wife and three kids. Two years later, he finally quit Renaissance and began focusing in earnest on Philadelphia’s Jewish community.

 

While Magerman reinvented himself, his new home was undergoing a transformation of its own. First, Philadelphia’s Jewish day schools were hit especially hard by the recession. Declining enrollment and rising tuition created a vicious cycle that atrophied a number of schools, especially the non-Orthodox ones. The woefully funded Jewish Federation of Greater Philadelphia wasn’t doing much to stem the “affordability crisis,” as it’s known. Magerman enthusiastically stepped in.

In 2008, he teamed up with Federation to plan “Megafund,” a major initiative that would boost funding for day schools. But when he got fed up with all the “legalese” and the glacial pace of negotiations, he abruptly left the partnership and set up shop on his own. The Kohelet Foundation was born, and Magerman’s been at odds with Federation ever since.

Since its inception, Kohelet has disbursed between $15 million and $20 million to area Jewish day schools—a larger amount than any other donor, including Federation. (Magerman says he’s given $50 million total to Jewish causes globally.) And because he sees public and non-Jewish private schools as a scourge that threatens all Jewish day schools, Magerman gives throughout the area, regardless of geography or denomination. (“Mike Bloomberg is doing great stuff in the world. He just doesn’t get that he should be supporting Torah education, not Harlem inner-city education,” Magerman says.) Tuition abatements at Perelman Jewish Day School’s Saligman Middle School, in Melrose Park, resulted in dozens of new admissions; a couple of grants essentially rebuilt Politz Hebrew Academy in Northeast Philly.

The community has taken notice. None of the two dozen businessmen, educators and Jewish community pooh-bahs I spoke with disputed Magerman’s newfound importance. When it comes to Jewish giving, says fellow Main Line mega-donor Gary Erlbaum (whose son, Marc, wrote and directed Café), “You just have one figure who stands head and shoulders above the rest.”

Meanwhile, thanks to newcomers like the Magermans, the Main Line’s Orthodox population has been booming. In the past 20 years, it’s grown from 250 to 750 families and from one Orthodox synagogue to five. Magerman’s own Orthodox empire is nestled in one square-mile pocket of Lower Merion, all of it centered on Montgomery Avenue, where young parents dressed in black push their strollers on Saturday mornings. The Kohelet Foundation is just up the street from Citron and Rose, which is right across the way from Magerman’s forthcoming restaurant, the Dairy, which is a third of a mile from Kohelet Yeshiva High School, which is a hundred yards away from Magerman’s synagogue, which is a quarter-mile from the manse he’s building himself down the block from the original Barnes Foundation.

The purpose of Magerman’s enclave—his eruv within an eruv, if you will—is not just to make life convenient for him on Shabbos. Rather, he explains, he’s working “aggressively” to make the Main Line even more of a hotbed for observant Jews.

But … why? Out of theoffice now, eating lunch in an inconspicuous corner of Citron and Rose, I ask Magerman how he reconciles his scientific mind with belief in God. What he says surprises me: “I’m close to faith, but I’m not quite there, because I’m too kind of wrapped up in ‘Wait a minute, how does that work, that doesn’t make sense.’” He adds: “I’ve kind of decided to live my life as though I have faith.”

Magerman attends services daily, bemoans the rise of the two-income f­amily, and does his best to abide by the rules of Orthodox Judaism. But not necessarily because God’s telling him to. As he explained in an op-ed piece last year on the necessity of funding Jewish day schools, he does it because the system works.

“Why do the Jewish people survive, and frequently thrive, in almost every era and almost every country we have gone to in exile? The answer is the one constant that Jews have always had throughout time and everywhere we have gone: Torah,” he wrote. “Sadly, we are now working hard to break this chain by convincing ourselves that the reason for our success in America is freedom and assimilation.” Later, like the fat man in Café whose own faith heals all the movie’s troubled characters, he tells me, “If Jews followed Torah, we wouldn’t have any problems.”

It’s July Fourth weekend, and I’m almost certainly the only person taking the Fire Island Ferry to visit an Orthodox Jewish guy. That a man whose religious denomination in theory condemns homosexual acts spends his summers on an island best known as a gay beach haunt is a paradox I can’t help commenting on when Magerman meets me at the dock. “Yeah,” he says of the island’s reputation, bemusedly. “And that’s great, ’cause it keeps people away.” It turns out the gay enclave is further east. He and his wife, Debra, whom he met on JDate, picked Fire Island precisely because it was low-key—the anti-Hamptons.

Indeed, Magerman isn’t overly preoccupied with appearances. During both our extended interviews, he’s dressed like he’s in summer camp: shorts, polos and ratty slip-ons. Decked out neither in the black garb of the Haredi (he’s not that Orthodox) nor like a guy who made a fortune as a high-frequency trader, Magerman has a Mark Zuckerberg quality to him. He’s a computer geek who fell into a shitload of money and never bothered taking off the hoodie.

On Fire Island, another Zuckerbergian trait emerges: Magerman is interested more in being correct than in being politically correct. Sometime in the late afternoon, after he’s pounded two bottles of unsweetened iced tea, he reclines in a wicker deck chaise overlooking the ocean and volunteers an embarrassing story.

Last November, the Jewish Federation of Greater Philadelphia was holding its annual fund-raising event at the Marriott in Center City. Before the dessert reception, at which Jay Leno would (ostensibly) humor the crowd, assorted big-money guys whipped out their checkbooks for a little friendly gift-giving competition. Magerman, emboldened, he confides, by excessive alcohol consumption, decided to one-up everyone in the room … while issuing a massive f-you to Federation.

“I stood up and said, ‘I am strongly supporting the missions of the agencies that Federation supports, if not Federation itself’’’—which was the jab—‘I agree to give $10,000 to any Federation agency that contacts my foundation.’”

Magerman was showing up his host—a.k.a. the mother hen and institutional power broker of the entire Philadelphia Jewish community—and flaunting his bling: 23 agencies took up his offer, and just like that, he was out $230,000. “I will tell you, it was not a ringing endorsement of Federation,” recalls shopping-mall magnate and Federation supporter Lew Gantman, diplomatically. “It’s not what you would typically see.”

Magerman says he’s undergone extensive therapy to tone down his confrontational behavior. But it’s not entirely clear he wants to; the Federation dinner wouldn’t be the first or the last time he refused to compromise his vision. Besides, by pulling off the stunt, he probably gave more to charity than Federation ever would have. “In a vacuum,” Magerman muses, “it was a beautiful thing to do.”

Last April, he suffered another breakup when Zahav and Federal Donuts creator Michael Solomonov announced he was leaving Citron and Rose. He and Magerman had opened it to great fanfare only six months earlier. The rift centered on Magerman’s plans to expand the restaurant to better serve Philly’s observant population. “I told him: I’ve got a community to serve,” he says. “The fact that this place is so nice and it’s hard for people to get reservations is actually a bad thing.”

Solomonov and his business partner, Steve Cook, Magerman says, weren’t interested in doing catering for a “mundane $5,000 kiddush or bris” for fear of tainting their “brand.” So he decided not to renew their contract. (Solomonov, who cautiously called Magerman “opinionated, but in a good way,” confirmed the source of the disagreement.)

Magerman knows he’s pissed off a lot of people with his my way/highway approach. But ultimately, he knows no one can get too upset at him. “How horrible, that guy gave $50 million to Jews,” he says, mimicking his critics. Indeed, those critics are less upset with what he’s doing than how he’s doing it.

One prominent philanthropist says his only wish is that Magerman could get himself a PR person so he would stop infuriating everybody and dividing the community. “I’m not sure exactly how much stability there is,” adds departing Perelman head of school Jay Leberman, irked at the amount of control Magerman insists on exercising over his carefully targeted grants. “There’s thoughts of grandeur there.”

For example, in late 2012, Magerman offered a $4.5 million gift to Perelman Saligman Middle School. Leberman says the Conservative school rejected it because Magerman wanted too much control in setting the terms on how the money would be spent. Magerman says the school board just didn’t trust his motives. Both assessments are true. “David’s a hedge fund person. This was a hedge fund move to make us look bad,” Leberman says. “He’s always one step ahead. You know, he’s calculating.” Magerman eventually withdrew the offer.

Perhaps the harshest indictment, however, comes from the man who tries—and fails—to say the least about Magerman. This past spring, the Jewish Federation of Greater Philadelphia parted ways with its CEO of seven years, Ira Schwartz. Ever since their Megafund project derailed, Schwartz and Magerman haven’t liked each other. Magerman, for his part, thinks Schwartz was a bad fund-raiser with a “gruff” personality who purposely underfunded Jewish education in favor of pet projects. Schwartz, as the following email exchange suggests, was similarly eager to dish. Here’s how our exchange unfolded:

I prefer to bow out and not get involved.

I tried again a week later, only to receive a similar reply:

I have no interest in getting involved in this matter.

Twenty minutes later, however, a sign of life:

I’m sure you’ll have no problem finding people who can fill you in on Magerman, both positively and negatively. I have no interest in getting involved.

And then, unsolicited, 45 minutes later, came this missive:

When you interview people about Magerman, ask them what one word that comes to mind that would describe him. This should prove to be quite revealing.

When I got back to him soon after with a half-dozen answers, he was dissatisfied by the lack of vitriol:

Who did you interview, his kids?

Eventually, he began plying me with the names of a couple of potential Magerman critics (neither criticized him), urging me repeatedly to “keep digging.”

There’s something about Magerman I haven’t mentioned yet. It’s true that he quit his hedge fund in 2008 in the midst of an existential crisis. But two years later, bored out of his mind, he rejoined the firm, working remotely. He emphasizes to me that he’s only an employee—not a manager—so he’s decidedly less involved in the business of creating wealth out of nothing for no discernible purpose. Still, the fact remains: He’s never psychologically adjusted to his new life mission. His cash can prop up teetering schools, but truly changing Philadelphia’s Jewish community might require something he doesn’t have.

One evening last December, Magerman found himself standing helplessly in front of a PowerPoint presentation in a packed auditorium, caught in a screaming match with a bunch of middle-school parents. Everyone in the room had a kid at either prestigious Saligman in Melrose Park or prestigious Barrack in Bryn Mawr. Saligman leaders were contemplating a move to the richer, faster-growing Main Line for financial reasons. Saligman parents didn’t want to lose their neighborhood school. Barrack parents didn’t want the competition. Everyone was freaking out.

So sometime in late November, Magerman created a Facebook group and invited every parent from both schools—­everyone else was barred—to a meeting at Gratz College that was so contentious, it’s near-impossible to get anybody to talk about it on the record. Magerman, a Saligman dad himself, would propose a handful of options to the parents, from maintaining the status quo to creating a new school. If two-thirds of them voted for any one choice, he’d provide tens of thousands of dollars in tuition abatements for parents of both schools. Ballots were printed and numbered. The whole thing was very professional.

As soon as he took the mic, however, the meeting dissolved into chaos. One person says a group of Barrack parents purposely “sandbagged” Magerman from the get-go, yelling loudly to disrupt the gathering. Another says Magerman was in fact the saboteur, undercutting the schools when he had no right to. Magerman himself says he walked out twice in frustration after losing his temper; others would say he was ousted. No single proposal received two-thirds of the votes, though one Saligman mom thinks the election may have been rigged. A couple weeks later, the schools made the decision themselves, agreeing to merge Saligman onto Barrack’s campus.

“I fault David for creating an environment where instead of having a thoughtful and rational dialogue about the future of Jewish education, he created an emotional hardship for many families,” says Montgomery County Commissioner and Perelman parent Josh Shapiro. “David should have never run the meeting in the first place,” echoed another Saligman parent who remained anonymous to avoid hurting Magerman’s feelings. When it came to massaging away the anxieties of a couple hundred strung-out parents, in other words, Magerman wasn’t the guy for the job.

Which leads us back to the problem of the two Davids. On one hand, Magerman came up with a creative and equitable solution to a crisis roiling a rudderless community. Kudos. On the other hand, his plan was hopelessly utilitarian, a “system” that hadn’t factored in what he might call human error: hurt feelings, held grudges, unfounded suspicions. It was classic “Two Jews, three opinions,” and a PowerPoint presentation didn’t stand a chance.

The day after the meeting, Magerman told the Jewish Exponent, “I can sleep at night knowing that I have done everything a person can do to get a good outcome.” The same could be said of his entire philanthropic mission. But that doesn’t mean anyone’s going to come out and thank him for his efforts. The system just doesn’t work that way.